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CFA LEVEL 2
The results from L1 came up in February 2004, that's why I didn't have as much time as before to prepare fo L2 exam. Actually, I've started learning soon after Christmas assuming success on L1. That's why I got some more weeks of studying. The fact is that hard learning I've started only after L1 results were published.
I was passing L2 when there was still essay on morning session. It was really new experience for me. Lucky those, who don't need to pass essay on the second exam. Now there is only multiply choice test. On the other hand, you will need to get through essay on the L3 anyway. That's why I will write about it in L3 section.
Level II exam is made of multiply choice test, but the construction of questions is different that those on Level I. Questions are based on longer stories (vignettes). Longer description gives you set of problems which are asked for in six questions. There are 20 vignettes on each session and each vignette comprises of 6 questions, which implies 120 questions in three hours. You have 18 minutes for one vignette, which implies 3 minutes for one question. Remember, that on L1 you had 90 seconds for each question. Now you have 180 seconds, but it ain't easier, because questions are longer and need more effort to answer. There is some risk that if miss some topic while preparing you can miss the whole set of six questions. That can hurt. If you want to approach test technically, to answer the question you will probably don't need to read the whole vignette before answering questions. You can focus only on parts of vignette and then skip to question. Do the same with following part of text and following questions. You can save some time this way.
CFA Level 2 STUDY KIT
What should you need to prepare reasonably and pass Level II exam.
1. STUDY NOTES (I had good experience with Schweser on L1, that's why is used their notes on L2). Unfortunately, I have to say that some things in Schweser were for me difficult to understand. Level II CFA curriculum touches more complicated issues concerning Financial Statements Analysis and Asset Valuation. I think that Schweser didn't gave answers for all questions which arise during studying. That is why I suggest some cautiousness while relying only on study notes. I think that the crucial idea is your background. I had financial background and it was easier for me to get through some topics. For persons who are fresh in finance relying only on notes may be very risky and reading original books may be essential. I used study notes, original books (Financial Statement Analysis) and made tons of sample exams and PASSED. But I know people who used only study notes and failed. BE CAREFUL WHILE RELYING ONLY ON STUDY NOTES. In DOWNLOAD section I have put some stuff you can use.
2. TESTS. TESTS. TESTS. Sample test are crucial on Level II like on any other level. Level II exam is multiply choice test. In DOWNLOAD section you'll find many useful stuff. In DOWNLOAD section you'll find many useful stuff.
3. ORIGINAL READINGS. As I mentioned before are looked up to original books to cover some tougher topics like financial statements analysis and asset valuation. Sticking only to notes may be not enough for people who are new in the finance. Moreover, if knowledge is more important for you than sole passing the exam, it’s obvious that books give you the whole coverage and help to dip into all topics. The choice is yours. People with financial background should manage to pass by studying from notes and sample tests. But this is not always the case.
CFA BEST LEARNING STRATEGY
I was mastered my learning strategy through all CFA levels. After passing three CFA exams I see that for me the most efficient way to learn was to:
1. READ all study notes ONCE to cover the whole ciriculum.
2. FOCUS on the KEY WORDS. These words are used in LOSes and in formulating questions. If you are short out of time and want to pass, focus on these words, because that is you are expected to know. Nothing more, nothing less.
Descibe means describing, NOT calculating. You don't need to know formula.
Calculate means that you have to know formula to answer the question.
3. DO SAMPLE TESTS, but not only questions concerning one study session. The most efficient way is to do test covering whole ciriculum. Why? Beacause that's why the real exam works. You can do one part very well, but ypu have to do the whole exam. That's why I prefere to make tests and back to study notes if you don't know how to solve questions.
CFA L2 TOPICS - focus on financial statements analysis and equity valuation
1. Ethics (10%) - As I wrote before, ethics on Level II and III gets harder. Working only with past years tests may be not enough. You should get through Standards Handbook and stick to topics which were not tested on L1 like ERISA requirements.
2. Quantitive methods (0-10%) - be prepare for analyzing ANOVA table results and interpreting regression coefficients. Don't miss easy points.
3. Economics (0-10%) - be prepare for some calculations - foreign exchange parity, rates of return in different currencies and foreign currency risk premiums. Lots of equations makes it little complicated. But this is only up to 10% of the whole exam.
4. Financial Statement Analysis and corporate finance (25-35%) - FSA is probably the hardest part of the L2 exam. You have to understand all the multinational operations stuff and other topics. Though issues and high weighting on the whole exam. Can't escape from that. Consider reading original assignments for better understanding.
5. Asset valuation (35-45%) - second leg of L2 examination. Previoulsy tested in essay. Nowadays, I don't know how it looks like. High weighting and crucial issues. Stick to it as long as you reach proficiency.
6. Porfolio management (5-15%) - SML and CML and some light issues. Should be easy points.
More hints you will find in TIPS AND TRICKS section.
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